Racking up credit cards, living above your means, and failing to put money in savings are just a few of the common financial mistakes we make in our 20’s. In fact, according to Business Insider, the average millennial carries about $45,000 in debt. If after a long weekend of brunch, dinners, buying drinks at the bar, and spending money on clothes and entertainment, you find yourself saying. “I’m broke” – then don’t worry, you’re normal.
We’re all guilty of it (even though nobody wants to admit it) but by 30 you should seriously consider getting a handle on the reckless spending and mastering these 5 financial behaviours.
Know Your Budget – Checking your bank account every week is not the same as having a financial plan. Write down your monthly gross income (after taxes) then add up your fixed monthly expenses (rent/mortgage, utilities, cable, insurance, cell phone, car payment). Subtract your expenses from your income. Allocate a percentage to put into savings and subtract it. What’s leftover is your discretionary income (aka “fun money”). This is called a budget. Don’t let yourself spend more fun money than you actually have.
Download the app, Mint, to help you stick to your budget. Mint has a dashboard to show you where all of your money is at any given time.
Rainy Day Fund – At the bare minimum, everyone should have at least $1,000 in savings as a “rainy day fund” for car repairs, unexpected medical visits, etc. Ideally, you should have at least 3 months of expenses in savings. If for some reason you find yourself out of a job or in transition between jobs, you will want that security blanket.
*Quick Savings Tip* – We live in the age of streaming (Netflix, Hulu, Amazon Prime) – save money by opting out of cable packages and only paying for internet.
Retirement – Beyond the rainy day fund, your money is no good sitting in your savings account. Grow your money (hello compound interest!) by investing in CI and taking advantage of your company’s RRSP plan. You should always be setting aside money for retirement, the earlier you start…the better.
Manage Your Debt – By now, you should have a solid plan in place to pay off your debt. Always pay over the monthly minimum on your credit card and pay off your smallest debts first.
Stop Comparing – You will have friends who make more money than you (or at least seem like they do). Everyone’s financial situation is different. Avoid comparing and follow your own plan. Don’t keep up with the Jones’ because the Jones’ are probably in debt.